Information Wants to Be Expensive

Newspapers need to act like they're worth something.

By

L. Gordon Crovitz

Updated Feb. 23, 2009 12:01 a.m. ET

With newspapers in cities across the country on the brink, an old idea is being resurrected in the hope of saving them: They should charge for access to their journalism on the Internet. This is a great idea, but about 10 years late.

Time magazine published a cover story earlier this month headlined "How to Save Your Newspaper." In it, former Time Managing Editor Walter Isaacson noted how odd it is to charge for subscriptions in print but not online. "Even an old print junkie like me has quit subscribing to the New York Times, because if it doesn't see fit to charge me for its content, I'd feel like a fool paying for it. This is not a business model that makes sense."

For a decade beginning in the late 1990s, I was the Dow Jones executive chiefly charged with defending the paid-subscription business model of The Wall Street Journal's Web site. The skunk at every Internet-bubble-era garden party, the Journal team was often told we "just didn't get it," that information wants to be free and the paid model was idiotic. In the late 1990s, the chairman of Internet.com predicted, "By 2000, it will be totally discredited and seen as a disaster." The now-defunct Suck.com Web site spoke for the net cognoscenti by calling paid content online "about as popular as pay toilets."

Conversely, when advertising fell in the early 2000s and then again more recently, having highly profitable online subscription revenues seemed like genius.

The truth is simpler: People are happy to pay for news and information however it's delivered, but only if it has real, differentiated value. Traders must have their Bloomberg or Thomson Reuters terminal. Lawyers wouldn't go to court without accessing the Lexis or West online service.

By 2007, the Journal's Web site had reached one million paying subscribers who value full access and convenient navigation to its unique business news. Another 20 million people each month read Journal articles made available free. Likewise, the Financial Times and ESPN generate significant online revenues from subscribers, along with free content. So do consumer services such as Consumer Reports and Zagat. Steve Jobs proved we'll pay up to $1 for digital songs on iTunes, and Amazon's Kindle established $10 as reasonable for a digital book. Beyond the Web, consumers pay monthly cable or satellite charges in the thousands of dollars per year.

Yet few city newspapers try to generate revenues directly from readers online, a huge problem now that advertising is so weak in print and online. Something needs to change if these newspapers and their large news staffs are to survive. The market capitalization of the New York Times Co. last week fell to the $500 million range -- what the MarketWatch Web site cost Dow Jones to acquire just a few years ago. Thus the renewed focus on new business models.

For years, publishers and editors have asked the wrong question: Will people pay to access my newspaper content on the Web? The right question is: What kind of journalism can my staff produce that is different and valuable enough that people will pay for it online?

It's true that much newspaper content, such as news from wire services, is not worth paying for in any medium. But newspaper journalists still report the key local news. American Lawyer founder Steven Brill argues that "local newspapers are the best brands, and people will pay a small amount to get information -- whether it be a zoning board or a Little League game -- that they can't get anywhere else." A few local newspapers, such as the Arkansas Democrat-Gazette and Hong Kong's South China Morning Post, charge for access online, knowing their news can't be found elsewhere. Even New York Times Executive Editor Bill Keller mused earlier this month that "a subscription model might be worth a closer look."

One reason most media companies suspended normal business practices online, such as seeking subscription revenues, was a misinterpretation of one of the most powerful observations of the Information Age. When author Stewart Brand coined the expression "Information wants to be free," he focused on how technology makes it cheap and easy to communicate and share knowledge. But the rest of his quote is rarely noticed.

This says, "Information also wants to be expensive." The right information in today's complex economy and society can make a huge difference in our professional and personal lives. Not having this information can also make a big difference, especially if someone else does have it. And for valuable information, online is a great new way for it to be valued.

It's past time for news companies to regain the courage to ask readers whether what they produce is worth paying for online. If it's not, less news will be produced, and news companies and their journalists will have only themselves to blame.

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